US stocks: Interest high in MasterCard IPO

NEW YORK - US stocks rallied on Thursday as a string of corporate deals and mergers, plus a robust initial public offering for credit-card company MasterCard, uplifted investor sentiment.

A government report showed first-quarter economic growth was below analysts' expectations. The data did not exacerbate worries about inflation and interest rates, which have battered the market over the past two weeks.

Boosting the Nasdaq, shares of Web auctioneer eBay Inc. jumped 12.2 per cent after the company unveiled an advertising alliance with Yahoo Inc. Prudential Equity Group raised its investment rating on eBay's stock to "overweight" and upgraded its view on the internet portals and commerce sector.

"You've got eBay and a big bank merger, and mergers add support to the market," said Jon Brorson, managing director of growth equities at Neuberger Berman in Chicago. "Cash hasn't disappeared in the last two weeks from corporate coffers, so we still have a reason why the market isn't going to fall to zero." The Dow Jones industrial average rose 93.89 points, or 0.84 per cent, to end at 11,211.05. The Standard & Poor's 500 Index gained 14.31 points, or 1.14 per cent, to finish at 1,272.88. The Nasdaq Composite Index climbed 29.07 points, or 1.34 per cent, to close at 2,198.24.

Before the market opened, Regions Financial Corp. said on Thursday it has agreed to acquire rival Alabama-based AmSouth Bancorp for nearly US$10 billion. The deal will create one of the top 10 US banks. But Regions shares fell 3.1 per cent, or US$1.09, to US$34.44 while AmSouth lost 3.1 per cent, or 90 cents, to US$28, both on the New York Stock Exchange.

MasterCard shares surged 18 per cent, or US$7, to US$46 a day after its initial public offering was priced slightly below the company's projected price range.

Shares of eBay jumped 12.2 per cent, or US$3.68, to US$33.88 and contributed the most to the Nasdaq 100's gain, while Yahoo's stock rose 3.6 per cent, or US$1.13, to US$32.92.

US crude oil futures for July delivery gained US$1.46 to settle at US$71.32 a barrel, lifting shares of oil companies. That marked a turnabout for the energy sector, which was one of the sharpest decliners in the recent rout on Wall Street.

The biggest boost for both the Dow and the S&P 500 came from Exxon Mobil Corp., up 2.4 per cent, or US$1.42, at US$61.52. Chevron Corp. was the S&P 500's next-best gainer, rising 3.3 per cent, or US$1.89, to US$59.49. Both companies' shares trade on the NYSE.

Supporting the Dow and the S&P 500, retailer Wal-Mart Stores Inc.'s shares gained 3 per cent, or US$1.42, to US$49.45 after Banc of America Securities raised its investment rating on the stock to "buy." General Motors Corp. shares shot up 5.2 per cent, or US$1.39, to close at US$27.90 on the NYSE after a report that more than 20,000 blue-collar workers have accepted buyout offers, surpassing the automaker's initial target. GM's advance also helped drive the Dow industrials higher.

On the economic front, the government said first-quarter gross domestic product grew at an upwardly revised annual rate of 5.3 per cent, slightly below forecasts.

Analysts said the weaker-than-expected GDP report meant that the Federal Reserve could pause in its two-year campaign of rate increases, but interest-rate futures still suggested a more than even chance of a June rate hike. Gross domestic product, or GDP, is the market value of all goods and services produced within the country's borders.

Trading was active on the NYSE, with about 1.74 billion shares changing hands, above last year's daily average of 1.61 billion, while on Nasdaq, about 2.03 billion shares traded, above last year's daily average of 1.80 billion.

Advancing stocks outnumbered declining ones by a ratio of nearly 7 to 2 on the NYSE and by more than 8 to 3 on Nasdaq.

- REUTERS